Autos

Mitsubishi boss unable to hide optimistic view

DETROIT — Takashi Nishioka, chairman of Mitsubishi Motors Corp., didn't wait for his interpreter before responding to a question about the Japanese automaker's financial condition.

But rather than breaking into English, he broke into a smile about the outlook for 2007.

Nishioka wouldn't estimate full-year results, but said that in the first six months of the automaker's current fiscal year ended Sept. 30, it lost $150 million.

Though that's a pretty hefty loss, Nishioka compares it to the $550 million it dropped a year earlier. And if a $400 million improvement in financial results isn't cause for a smile, what is?

He wouldn't say what contribution North American operations, in Downstate Normal, would make this year, other than expecting an operating profit.

Mitsubishi long has said that to be solidly profitable in the U.S. it needs to operate at least two shifts at Normal, something last done in 2004.

Nishioka said there still are no plans for that second shift.

"We'll try to make a profit on one," he said in an interview.

It helps that the United Auto Workers at Normal agreed to $4 an hour in concessions--cutting base pay $1.50 and forgoing a $2.50 cost-of-living increase--last September that will run through August 2008.

He acknowledges that North America is vital.

"It's a vast market for cars and while we face a tough situation now, you can't talk about not being in the U.S. market. We'd like to sell more because we have capacity to build more."

Despite excess capacity, there are no plans to add models at the plant.

Mitsubishi sold 118,558 units in the U.S. in 2006, down 4.4 percent from 123,995 in 2005. Sales, however, rose 4 percent in the last nine months of 2006.

It builds the Galant, Eclipse coupe and convertible and Endeavor sport-utility at Normal. It imports the Lancer car and Outlander crossover from Japan. And Dodge supplies it with the Raider, a version of the Dakota.

Mitsubishi has developed a high-mileage, low-price mini concept that some insist would attract buyers. But Hiroshi Harunari, head of U.S. operations, isn't keen on adding it.

"We have to sell 50,000 to 60,000 units of any vehicle or lose money," he said, estimating that mini would be low volume.

Besides, selling equally low--or no--profit minis is hardly an attraction when struggling to turn a profit.

"We'd wait until our volume got higher to sell low-margin cars. We prefer to sell fewer cars at a profit than more cars at a loss," Harunari said.

RUMORAMA: The latest word on the street in Detroit is that General Motors will boost production.

Seems strange considering sales were down 13 percent in December and 8.7 percent for the year, hardly motivation to crank up the assembly lines.

Reason for the buildup, the rumor mill says, is to stockpile inventory should contract talks falter with the UAW this fall and the union strike.

Troy Clarke, president of GM's North American operations, bristles at that because GM spent the last year getting the union to agree to health-care concessions as well as buyout offers to thin the hourly ranks.

"I can't think of anything worse after building up a relationship with the UAW than to do something like this. We have no such scheduled actions," he said in an interview.

Neither is GM planning to boost production to keep Toyota from passing it and become the No. 1 automaker worldwide.

"I haven't been told to build more," said Gary Cowger, who as group vice president in charge of global manufacturing and labor for GM oversees 178 factories in 34 countries. "But I do know that to build more we have to sell more, and we still aren't at 100 percent capacity in our plants."

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Read Jim Mateja on Sunday in Transportation and Tuesday and Thursday in Business. Hear him on WBBM-AM 780 at 6:22 p.m. Wednesdays and 11:22 a.m. Sundays.